12 October 2012 6:52 PM

Green cronyism is alive and well in the Obama administration

During Thursday’s vice presidential debate Vice President Biden denied any cronyism in the awarding of Energy Department grants. He said to Paul Ryan, the Republican vice presidential candidate, 'and all this talk about cronyism. They investigated and investigated, did not find one single piece of evidence. I wish he would just tell - be a little more candid.'

It’s Vice President Biden who should be more candid. Email exchanges published by congressional committees show cronyism’s influence in Energy Department awards.

For instance, emails from March 2011 show substantial White House involvement in directing Department of Energy subsidized loans to BrightSource Energy, a company that received a $1.6 billion loan from the government to build the world’s largest solar power plant in the Mojave Desert.

Jonathan Silver, then-executive director of the Energy Department’s loan guarantee program, helped draft a letter from John Bryson, then-chair of BrightSource Energy, to then-White House chief of staff William Daley requesting help in obtaining the loan. These emails were written from Silver’s personal account during business hours and provided advice to BrightSolar on March 7 and 8, 2011.

It would have been improper for a government official to have assisted an applicant for a government loan program using a government computer on government time. But it’s impossible to believe that using a nongovernmental account makes the action appropriate. Indeed, it appears to be an effort to conceal an unseemly activity.

In an additional crony twist, in October 2011 Bryson became President Obama’s Secretary of Commerce.

Then, take Solyndra, the California solar panel company which received $528 million in energy loan guarantees from the Energy Department in 2009 before going bankrupt in August 2011.

Why did the Department pour more funds into Solyndra and accept a subordinate status on the loan? Because one of President Obama’s campaign contributors, George Kaiser, was a major investor through Argonaut Private Equity. Kaiser raised between $50,000 and $100,000 in donations for the president, and donated over $50,000 to Democratic political action committees.

White House visitor logs for 2009 show that George Kaiser made several visits to key White House staffers before the loan guarantee for Solyndra was approved. From 2009 to 2011, he made seventeen visits to the White House.

On August 2, 2012, the House Energy and Commerce Committee concluded in a report entitled 'The Solyndra Failure' that 'George Kaiser, whose fortune funds the George Kaiser Family Foundation, was closely involved in financial decisions relating to Solyndra, often authorizing key disbursements and restructuring proposals, as well as in Solyndra’s lobbying, public relations, and government procurement strategies in Washington.'

Ken Levit, executive director of the George Kaiser Family Foundation, and Tony Knowles, president of the National Energy Policy Institute (co-founded by Kaiser), came along on several of these White House visits. Mr. Levit wrote to Steve Mitchell, a Solyndra board member, on February 27, 2010, 'They about had an orgasm in Biden’s office when we mentioned Solyndra.'

On October 6, Mitchell wrote to Kaiser, 'In addition, the consensus is that a meeting with the new White House Chief of Staff is the best avenue to approach the administration for support on the DOE front and for assistance in securing any type of procurement commitments from the government and the military.'

And as Soyndra was facing increasing difficulties, Steve Mitchell detailed more cronyism in an e-mail to George Kaiser. He wanted the Department of Defense to buy Solyndra’s solar panels over the next three years outside the usual procurement process. Mitchell wrote, 'We are also planning to ask the DOD to execute a purchase order to buy our panels—DOD has 3X the rooftops of Wal-Mart and is the biggest consumer of electricity in the US (and wants to buy solar panels)…. the DOD has the capacity to easily sign a 300MW three-year purchase order for our panels…'

Biden said on Thursday night, referring to green jobs, 'It was a good idea, Moody's and others said that this was exactly what we needed to stop this from going off the cliff. It set the conditions to be able to grow again. We have, in fact, 4 percent of those green jobs didn't go under - went under, didn't work. It's a better batting average than investment bankers have. They have about a 40 percent...'

But this is false. Government-supported energy companies have had a notoriously unsuccessful track record. Of the 33 energy loan guarantees made under the Energy Department’s programs, 26, or almost 80 percent, have shown signs of trouble. 'Trouble' ranges from missed production goals to bankruptcy filings. Compact Power, a battery company, just announced plans to furlough much of its workforce.

A report by the House Government Reform and Oversight Committee published in March reported that 23 loans were judged by ratings agencies as 'junk' because of their low credit quality. An additional four were rated BBB, a low investment trade.

As much as Biden tries to defend his administration’s green jobs program, the facts speak for themselves.

Diana Furchtgott-Roth, senior fellow at the Manhattan Institute, is the author of Regulating to Disaster: How Green Jobs Policies Are Damaging America’s Economy, just out from Encounter Books.

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DIANA FURCHTGOTT-ROTH

Diana Furchtgott-Roth, former chief of staff of President George W. Bush's Council of Economic Advisers, is a senior fellow at the Manhattan Institute for Policy Research. From 2003 to 2005 she was chief economist of the U.S. Department of Labor. Ms. Furchtgott-Roth is a contributing editor for RealClearMarkets.com and a columnist for The Examiner and for Tax Notes. She is editor of Overcoming Barriers to Entrepreneurship in the United States and coauthor of Women’s Figures: An Illustrated Guide to the Economics Progress of Women in America. Ms. Furchtgott-Roth received degrees in economics from Swarthmore College and Oxford University.